Study finds Weld County would lose thousands of jobs, millions in taxes if fracking banned statewide

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A new study of the economic effects of a potential statewide ban on hydraulic fracturing shows that Colorado and Weld County would lose out on thousands of jobs and millions in tax revenues.

The University of Colorado Leeds School of Business on Wednesday released a study on the economic impacts of a potential statewide fracking ban, finding that in the first five years, the economy would lose $8 billion in gross domestic product, roughly 68,000 jobs and $567 million in tax revenue that’s pumped into state and local coffers.

Those numbers would be projected to grow to a $12 billion loss in GDP, 93,000 fewer jobs and a $985 million loss in tax revenues by 2040, according to the study.

“I really hope this is an informative piece for people to understand another aspect of the economy, specifically oil and gas,” said Brian Lewandowski, an author of the study and a research associate with the Leeds School of Business at CU. “It resonates with me how big of an impact this industry has on our economy in terms of jobs, wages, personal income and spending in the state.

“There’s a lot to risk there if that were to go away. It’s not the only thing, of course, to consider when making policy decisions, but it should be part of the conversation.”

Weld County would stand to lose the most, as a majority of the state’s oil and gas activity is now centered in its prolific Wattenberg Field and the northeastern plains.

Anadarko and Noble, just two of about 30 operators in Weld, plan to spend billions in Weld in the next few years. The oil and gas and construction industry gained the most jobs in the last year, with 2,500 positions — almost half of the jobs gained in the county in that time.

The study, commissioned by the Common Sense Policy Roundtable, the Denver South Economic Development Partnership and the Metro Denver Economic Development Corporation, was prompted by bans and moratoria put in place in five communities in the last two years, as well as rumors of a potential statewide ballot initiative.

A group called Local Control Colorado has already submitted language to the state for a ballot issue this fall that would allow local governments to stray from existing state law by allowing communities to decide for themselves their tolerance for the industry and its practices in their borders.

“This is part of an expensive campaign by the industry to scare voters,” Laura Fronckiewicz, a leader of Local Control Colorado, told the Denver Post in response to the study. “This isn’t about banning fracking, it is about giving communities the ability to put some controls on development — community by community.”

The Leeds study used an economic modeling system developed by Regional Economic Models Inc.

To put the projected job loss into perspective, Lewandowski said the state lost about 160,000 jobs during the recession. He said the oil and gas industry in 2012 was the equivalent size of the construction industry, or the accommodation and food service industry.

“If you scale back any of these in any great magnitude, it will have negative repercussions,” Lewandowski said. “But oil and gas is a high GDP-per employee industry, and a high wage per employee, and it has a pretty intensive supply chain, so a lot of goods or services are bought because it’s inherently local.”

That would mean a negative impact on disposable income, which would in turn impact consumer-supported industries, such as retail and real estate, the study stated.

Additionally, the impacts would be statewide, as the oil and gas industry is represented in all counties, while 87 percent of the oil and gas activity is concentrated in five counties, Lewandowski said.

The five largest-producing counties represent 35 percent of upstream and midstream employment, the 31 smallest-producing counties represent 29 percent, and the 28 non-producing counties account for 36 percent, according to the study.

Doug Flanders, policy director for the Colorado Oil and Gas Association, called the study groundbreaking, confirming that “a ban on fracking would send shock waves through our economy. The loss of jobs and the severe decline in economic output would be staggering. Every family in Colorado would be affected.”

“If we say ‘no’ to fracking, we say ‘no’ to nearly a hundred thousand Coloradans and their families whose jobs and livelihoods would be lost,” Flanders said in an email statement. “Plus, the loss of billions of dollars for our schools, parks, and roads.”

The study also was welcomed by Coloradans for Responsible Energy Development, a lobby funded by Colorado’s big exploration giants: Anadarko Petroleum and Noble Energy, in that it exposes the consequences of bans.

“This study will dispel some of the misinformation about fracking and help everyday citizens better understand the issue at hand, while also illustrating how energy is interwoven throughout Colorado’s economy and the benefits it brings to all of us,” said Jon Haubert, communications director for CRED, in an email statement. “Coloradans now have a crystal clear understanding of the cost to them personally if oil and natural gas is removed from the equation via a ban or moratorium on fracking.”